As more advertising dollars pour into digital -- and into agency trading desks -- the exchange model's momentum is likely to continue, no matter what level of integration comes from the merger of Publicis Groupe and Omnicom.
Several executives who have served with the trading-desk side of the agency business and moved on said that while the actual merger will take months to show any tangible effect, the immediate aftermath will force all the major ad-holding companies to sharpen their digital focus (for more details, see our previous post on the scenarios for the two trading desks here). That's in addition to other strategic initiatives, like expanding their respective presence in emerging markets -- another area, in addition to digital, that represents clear pathways for growth.
As for the future of the trading-desk business, which remains a relatively small part of the overall holding company business, it remains to be seen whether Omnicom's Accuen and Publicis's Vivaki AOD will ultimately be folded together. Any decision there is unlikely in the short term, of course. Either way, Forrester analyst Joanna O'Connell, a former manager of Razorfish's early trading desk ATOM Systems before it was acquired by Publicis, said this will hasten changes in the way agencies use exchange-based systems.
"This deal doesn't change my opinion, which I've said before, that trading desks will fade away as distinct entities and become a more permanent, integral part of the agency business as a whole," O'Connell said. "The trading-desk service has been too far away from the agency team and the client. It's more likely than ever that we're going to see that situation change quickly."
O'Connell pointed to Accuen's own evolution within Omnicom as a sign of what's to come. Over the past year, Accuen has become more embedded with all parts of Omnicom's media-buying shops, which include OMD, PHD and Resolution Media. That's less true with VivaKi AOD and Publicis media-buying operations Starcom Mediavest Group, Razorfish, Digitas-LBi, MRY and Performics.
"The model at VivaKi and the others is to position the trading desk as a hub, with the other parts of the agency using it as a tool as they see fit," O'Connell said. "At Accuen, clients have direct and regular access to the trading desk. It will be interesting to see whether that approach gels at VivaKi."
Former Omnicom Media Group digital executive Matt Spiegel, currently SVP, GM Americas at MediaMath, said it would be premature to say what will happen with the trading-desk model, but it is clear that digital in general and programmatic efforts by the agencies will benefit.
"I would be shocked if any of the major agency brands disappeared any time soon," Spiegel said. "The whole concept of the holding companies is to have a lot of different entities available to clients. But business as usual will include greater use of programmatic offerings. While there is a ton of digital innovation, it feels like it's being done in pockets. But this combination is so huge, it will bring significant advancements in the use of data. Plus, more technology equals better performance. Clients will want to find new ways to take advantage of that."
Tom Denford, founding partner of UK ad consultancy ID Comms and a former executive with Carat and WPP's MEC, said it's unlikely VivaKi AOD and Accuen will be merged. But the long process of integration will give it the wherewithal to rethink the trading-desk model and address its challenges -- primarily from the client side of the business.
"There is no significant benefit for the merged group to having a single proprietary technology to manage media trades, whilst the downsides of having a single trading offering are many," Denford said. "Most importantly, agency clients are increasingly suspicious of the transparency of buying media via trading desks so reducing the clients' options further in this area would make little sense."
In Denford's view, the trendlines point to agencies investing in more variations of trading-desk technologies, as opposed to consolidating it into one solitary offering spread across internal media-buying operations.
"The technology can be scaled and tailored to suit client requirements and agencies are going to have to offer a more bespoke service to avoid losing media-trading income to a client's in-house system," Denford said. "Giving clients greater choice empowers them to make assertive decisions in the trading-desk space and this arguably negates any debate over transparency."
Either way, Publicis and Omnicom will have plenty on their plate to sort out and the placement of trading desks is not at the top of their lists, Denford noted. Nevertheless, the other major holding companies -- WPP Group, Interpublic and Havas -- will certainly be making plans for their respective exchange-based units.
Jay Sears, GM of the Rubicon Project's REVV Buyer, agreed with Denford's expectation that there will be a proliferation of trading-desk options within holding companies.
"Just like there are agency networks inside the holding companies to avoid conflicts ('conflict shops'), look for the biggest holding companies to create two or more trading desks under the same holding company roof," Sears said. "This will be done to accommodate both conflicts (competing clients) and different business models (transparent and nontransparent; fee and performance) — this is a good outcome for the holding company. The scale of the Omnicom and Publicis combination is another vote for scale winning and this is good for any ad technology company that is successfully delivering an enterprise-grade, global solution that can empower these global workforces."
As for what will happen in the short term, O'Connell, who has been through this before when Publicis integrated Razorfish's ATOM into its digital holdings, noted that there will be a process of learning and discovery between the two cultures.
"I think the introduction of ATOM into VivaKi had a definite impact on AOD," O'Connell said. "And it was a learning experience for both parties. But the big challenge, like any merger, is how to deal with different philosophies. That's tougher to deal with than combining technologies."